• Leonard Brecken

Wage Growth & Offsets in Housing


One of the more interesting things revealed this AM is that acceleration in Wage growth (see Chart courtesy of Bloomberg) in 1Q18. Both measures of Employment Cost & Private Sector Wages have shown increases similar to pre-recession levels a big change for a long time. Wage growth is essential for the housing market because of rising interest rates which impact demand as a result of negatively impacting affordability. The fact that we are seeing wage growth tells me the rise in interest rates will get offset (at least in part) preventing a repeat of the extreme problems of 2008/09. However, with 10 year Treasury interest rates breaching 3% recently and still not near 2008/09 rates still have a ways to go. As a reminder 10 year Treasury interest rates were ove 4.5% so it begs to question why are they still so low: Central Banks buying bonds. As a word of caution the Central Banks are reducing their bond purchases so its logical rates could rise further everything else equal.


Recent Posts

See All

Trade War & Split Congress

Just wanted to take a moment to make a few comments as we head into 2019 post the elections. The GOP losing control of the House in our view has increased the odds that the Trade War with other count

The Economic Road Past & Future

Some of you haven't know me long and others understandably don't read every article/post I write. So I thought it necessary to review where we came from and where we are going (at least where I think

© 2018 by Charlotte Consultant Services

  • Black Facebook Icon
  • Black LinkedIn Icon